FTSE 100 Drops as Banking Sector Falls on US Fed Concerns
|
|
|
For today's update see Spread Betting Daily.
The Daily Update from Anthony Grech, Research Analyst, IG Index.
Spread Betting 18 August 2011: 11.00am Update
European shares fell sharply this morning as worries about global growth prospects and the lingering Eurozone fiscal crisis continue to turn spread betting on shares investors increasingly risk averse.
Meanwhile in the UK discouraging retail sales data cast a darker cloud over the already fragile economy.
European banking arms in the US are under scrutiny this morning as the US Fed and regulators signal concerns that Europe's debt crisis could spill into the US banking system.
The FTSE 100 dropped over 2% this morning to a low of 5199.71 as the banking sector weighed heavily on the index. The broader FTSE 250 was also over 2% lower this morning at 10,106.08 on the back of poor retail sales data.
Global growth forecast gets cut
Market confidence weakened this morning following a report released from Morgan Stanley announcing it has cut its forecast for global growth this year.
The report mentioned that Europe's response over its sovereign debt crisis was 'insufficient'.
The bank's new estimate for global expansion is now 3.9% for the year, down from a previous forecast of 4.2%. A prediction of 3.8% for next year is reduced from 4.5% previously.
Morgan Stanley additionally cut its estimate for growth in the G-10 nations to 1.5% for both this year and next year. This is down from previous forecasts of 1.9% this year and 2.4% the following year. Further weighing on market sentiment was China's growth rate also being cut next year, to 8.7% from 9%.
The threat to the global economy from Europe's slow and inadequate response to the sovereign crisis and the drama around lifting the US debt ceiling has shaken world markets this month and wiped trillions of dollars off the value of equities.
At the same time, slowing expansions in countries including Germany and the US are hurting confidence. Morgan Stanley analysts remarked that the US and Europe are 'dangerously close to recession'.
UK retail sales data
Retail sales barely grew in July, data released by the Office for National Statistics showed this morning, further emphasising the risks for the fragile economic recovery.
Data revealed that sales volumes (including automotive fuel) grew by just 0.2% in July compared to a revised rise of a 0.8% in June. Analysts had forecast a rise of 0.3% on the month and an equal annual rise as retailers cut prices in aggressive summer sales.
Excluding fuel, retail sales also grew by just 0.2% in July compared to a revised 1% rise in June. At an annual rate in the month of July, retail sales fell 0.2%.
Many retailers expect further worsening sales throughout the year as Britons cut back on spending owing to soaring prices, higher taxes and slow wage increases eat into their budgets, and uncertainty about job security weighs on sentiment.
Data released earlier this week revealed that the unemployment rate rose to 7.9% in July and wages increased only 2.2%, while inflation soared by 4.4%. Economists expect consumption to be a major drag on the economic recovery, which has stalled in recent months.
US pre-market open
US futures plummeted this morning signalling that Wall Street will open with significant losses. S&P 500 futures were 1.80% lower at 1168.5 and Dow Jones futures were 1.84% lower at 11,172.00.
This afternoon spread betting investors will be looking towards US data due for release. Any additional data signifying slow economic growth will likely have an impact on trading.
At 1.30pm (London time) the US will release consumer price index and jobs data, followed by leading indicators, housing numbers and the Philadelphia fed manufacturing survey at 3pm (London time).
Remember that financial spread betting is a leveraged product and can result in losses that exceed your initial deposit. Spread betting may not be suitable for everyone, so please ensure that you fully understand the risks involved.
The above comments do not constitute investment advice and neither IG Index nor SpreadBets.org.uk accept any responsibility for any use that may be made of them.
Advert:
IG Index Spread Betting - No Fees, No Commissions, Free Charts and Live Prices.
Spread Bet on Indices, Forex, Commodities, Shares and more. For details see IG Index.
|
Spread Betting 18 August 2011: 6.00am Update
On Wall Street overnight, the US indices were flat to slightly lower in another pretty volatile session that saw the S&P 500 trade in a 24-point range.
The spread betting markets opened up by approximately 1% on the back of good corporate earnings news, before drifting from there. The NASDAQ was the worst performer - down 0.5% - while the S&P 500 rose 0.1% and the Dow Jones Industrial Average finished flat.
Asia & Australia
Across Asia, regional markets are all lower following the negative lead from the NASDAQ. Technology names came under pressure following Dell’s disappointing sales outlook, which spurred worries over the outlook for Q3 growth.
The Kospi is the worst performer - down 2.1% - while the Nikkei 225, Shanghai Composite and Hang Seng are all weaker between 0.1% and 0.7%.
In Australia, the ASX 200 is currently 1.3% weaker at 4247, just above its intraday lows of 4246. After the Australian market’s relative outperformance yesterday it is not surprising to see it underperform today, given the lack of any definitive leads from Wall Street overnight.
Losses for the day are broad-based, with the healthcare, energy and materials sectors the biggest percentage declines, while the heavyweight financial sector is seeing more modest losses. The consumer staples and utilities sectors are the only sectors in positive territory.
Europe
Volatility is certainly ebbing out of equity markets right now. A lacklustre session on Wall Street yesterday and the question marks continuing to linger over the state of the global economy have left traders across Asia very much on the back foot.
Consequently, further losses are expected to be posted at the open in Europe and with the flow of corporate news slowing as well, volumes could well remain subdued in the near term.
There are, however, a handful of economic readings on the agenda today which could inject some direction, including inflation, existing home sales and the Philly Fed all out of the US.
One company which may prove interesting in terms of earnings is Hewlett Packard, and in light of Dell's numbers earlier in the week, any signs of innovation here could well provide some cheer for the stock.
Any hopes, however, that we'd see volatility die away quite quickly seem set to be dashed, and there's no real sign of an August lull coming along quite yet.
Ahead of the open we're calling the FTSE down 72 at 5260, the DAX down 98 at 5851 and the CAC down 48 at 3206.
Remember that financial spread betting is a leveraged product and can result in losses that exceed your initial deposit. Spread betting may not be suitable for everyone, so please ensure that you fully understand the risks involved.
The above comments do not constitute investment advice and neither IG Index nor SpreadBets.org.uk accept any responsibility for any use that may be made of them.
Advert:
IG Index Spread Betting - No Fees, No Commissions, Free Charts and Live Prices.
Spread Bet on Indices, Forex, Commodities, Shares and more. For details see IG Index.
|
"FTSE 100 Drops as Banking Sector Falls on US Fed Concerns" last update by AG, 18-Aug-2011
Warning: Financial spread betting carries a high level of risk. You can lose more than your initial investment or stake. Financial spread betting may not be suitable for all investors. Only trade with money that you can afford to lose. Make sure you fully understand the risk involved. If necessary, seek independent financial advice.
Similar articles:
Spread Betting Daily - last update: 17-May-2012
Your daily spread betting update from the insiders. A look at the FTSE 100 and a range of other spread betting markets from Crude Oil to Shares to Gold to . . . read more Spread Betting Daily.
Spread Bets Daily Markets - last update: 16-May-2012
Spread Betting Daily News - A daily trading update from IG Index. Every weekday the experts offer their view of the markets . . . read more Spread Bets Daily Markets.
Shares Trading: AstraZeneca Declines on Plummeting Pre-Tax Profits - last update: 26-Apr-2012
Drug maker GlaxoSmithKline dropped 0.4% after it reported a 13% decline in first-quarter profits, while AstraZeneca declined 5.6% after it reported a 40% drop in pre-tax profits. Unilever shares climbed 3% to 2635p after sales rose . . . read more Shares Trading: AstraZeneca Declines on Plummeting Pre-Tax Profits.
ARM Holdings Spreads Rally amid Stellar Apple Results - last update: 25-Apr-2012
In equities spread trading, ARM Holdings was the top FTSE 100 gainer, up 4.3%, bouncing after a lukewarm reception to in-line results from the British chip designer on Tuesday. The price gain was on the back of forecast-beating . . . read more ARM Holdings Spreads Rally amid Stellar Apple Results.
Spread Trading: Rallying Banking Stocks Push FTSE Higher - last update: 24-Apr-2012
Banking stocks led the FTSE's marginal recovery. Lloyds rose 2.25 %, while Barclays, Standard Chartered and HSBC spread trading markets were up by 1.34%, 0.15% and 0.1% respectively. Miners also edged up today . . . read more Spread Trading: Rallying Banking Stocks Push FTSE Higher.
Index Spread Betting: FTSE Falls 100 Points as Sarkozy Losses Election Round - last update: 23-Apr-2012
The FTSE 100 shed a hundred points during the morning session as uncertainty over the French presidential election on Sunday unnerved investors. Current French President Nicolas Sarkozy lost to Francois Gerard Georges . . . read more Index Spread Betting: FTSE Falls 100 Points as Sarkozy Losses Election Round.
Broker Upgrade Boosts Lloyds Shares Spread Betting Market - last update: 20-Apr-2012
Elsewhere in shares spread betting, Lloyds was the second-biggest FTSE 100 gainer, up 3.5% as Investec Securities reiterated its 'buy' rating on the part state-owned British lender. Unsurprisingly, shares in Barclays and . . . read more Broker Upgrade Boosts Lloyds Shares Spread Betting Market.
FTSE 100 Spread Betting Index Rises on Successful Spanish Auction - last update: 19-Apr-2012
The FTSE 100 spread betting index traded at 5783.8, gaining 0.64% by midday (London time) on the back of a successful Spanish bond sale. Spain sold €2.541 billion of debt, slightly above the upper end of their target . . . read more FTSE 100 Spread Betting Index Rises on Successful Spanish Auction.
Increased Gold Output Causes Fresnillo Spreads to Rally - last update: 18-Apr-2012
Also in shares spread betting, Fresnillo was one of the mining sector's best performers, gaining more than 3% as gold output was ahead of target, due to the opening of a new mine, Noche Buena. This came despite an . . . read more Increased Gold Output Causes Fresnillo Spreads to Rally.
EUR/USD Forex Spreads Push Higher Despite Rising Spanish Yields - last update: 17-Apr-2012
Talk on the floors seems to be centred on the sharp move higher for the EUR/USD financial spread betting market in US trade, despite no one single catalyst to attribute the move too. One gets the sense though that $1.30 seems . . . read more EUR/USD Forex Spreads Push Higher Despite Rising Spanish Yields.
Spread Betting Daily Index - An index of Mid-Morning Daily Spread Betting Reports covering the key Index, Forex, Shares and Commodities markets.
|
|
|
Free Financial Email: Latest Spread Betting Offers and where to find narrow spreads.
Click here to sign up.
|
|
